8 Tips for Finding the Best Business Broker
Selling your small business for the highest price is the result of years of dedication and persistence and the dream of many entrepreneurs. Finding buyers for your business sale can be difficult if you aren't in a hot industry or lack unsolicited offers. An option to gain access to a larger pool of buyers and a structured selling process is to consider a business broker.
What Is a Business Broker?
A business broker is similar to a real estate agent. Business brokers provide the match-making service of bringing together buyers and sellers. The right business broker can help your small business to achieve the highest potential sale price.
Finding a Business Broker
Identifying the best business broker requires that you take several necessary steps.
- Get Referrals: If possible, always start with a referral from a trusted source. Ask your accountant, lawyer, peers, and industry association for names of good business brokers.
- Check IBBA: The International Business Brokers Association® (IBBA) is a nonprofit "trade association of business brokers providing education, conferences, professional designations, and networking opportunities." IBBA has over 1,000 business intermediaries around the world.
- Practice Due Diligence: Just as a prospective buyer of your company will exercise due diligence so should you. Examine your broker's background, experience, and credentials. Are there any lawsuits or complaints against them? Check the Better Business Bureau. Investigate their references. Have they handled sales of your type of business before?
- Find a Dedicated Practitioner: A business broker who spends all their time selling businesses will add more value to your sales transaction than a part-time agent. A full-time business broker can not only bring in a network of contacts but has an understanding of the principles of business valuation. Find someone who is dedicated to the profession. If your company value may be worth millions, consider merger and acquisition intermediaries. The IBBA's Code of Ethics is a useful tool to refer to during your search.
- Keep a Secret: Avoid losing key staff and suppliers – don't tell them your business is for sale. The selling of your small business is a highly confidential matter. Your business broker should ensure all safeguards are in place to protect your company. One word to your suppliers, employees, or customers that you are selling the company can have repercussions on your business operations.
- Deliver a Marketing Plan: Selling your business is all about marketing. Properly positioning the sale of your company to attract and motivate as many buyers as possible should be your goal. Ensure your business broker has a marketing plan including details of advertising strategies to attract a wide range of potential buyer leads.
- No Large Upfront Fee: A business broker fee ranges from 10 percent to 15 percent commission of the sale price of your company. Avoid any broker asking you for a large upfront fee to assess your business value or start an application process.
- Avoid the Pressure: Never allow your business broker to put you in a pressure situation. Do not make a rush decision. The selling of your company is a complex transaction, personally and professionally. Take the time to learn and clarify all uncertainties.
The right business broker can help your small business find a source of potential buyers and aid in the sale of your company. Selling your business is a complex matter. Work with your team of professional advisers for the best results.